By
Lenie Lectura - July 9, 2017
THE Power Sector Assets and
Liabilities Management Corp. (PSALM) is seeking regulatory approval to pass on
to end users the stranded debt of the National Power Corp. (NPC) amounting to
P3.7 billion through the universal charge (UC).
PSALM, in a petition for the
availment of NPC’s stranded contract costs (SCC) portion of the universal charge
for 2016 filed before the Energy Regulatory Commission (ERC), proposed to
collect P0.0429 per kilowatt hour (kWh) for one year to mitigate the
impact on consumers.
“The calculated UC-SCC for the
calendar year 2016 amounts to P3,686,192,736.05, which is equivalent to P0.0429
per kWh covering a one-year recovery period”, said PSALM, which is seeking a
provisional authority (PA) from the ERC to charge and collect the computed
UC-SCC, or such amount determined by the commission.
It said the 2016 UC-stranded debt
(UC-SD) adjustment was calculated based on the projected energy sales of 85,935
gigawatt-hours. “The UC-SCC rate for 2016 is derived by dividing the calculated
2016 SCC by one-year electricity sales forecast for 2018 based on the Power
Development Plan 2015-2030.”
As provided under Section 34 of the
Electric Power Industry Reform Act, UC will be imposed on all electricity
consumers to cover payment of NPC’s stranded debt and stranded contract costs.
Stranded contract costs refer to the
excess of NPC’s contracted cost of electricity with independent power producers
(IPP) over the actual selling price of the output. Stranded debt refers to
NPC’s unpaid obligations that were not liquidated by proceeds from the sale of
its assets.
The UC, which is a separate line
item in consumers’ electric bills, has different subcomponents, depending on
the utilization of the funds as specified in the UC collection.
“As PSALM has vigorously pursued its
mandate of privatizing the generation assets and the power facilities,
revenues from the sale of electricity of the remaining assets are not enough to
cover its operations and provide funds for the payment of NPC debts and
obligations,” the PSALM said.
To address the funding gap, PSALM is
forced to resort to temporary solution by borrowing that entails borrowing
costs, which, in turn, will form part of the UC-SD, effectively increasing the
UC burden of all electricity users.
But if PSALM would be allowed to
immediately recover the UC-SD under its petition through provisional approval,
new loans and refinancing to service maturing debts and lease obligations would
lessen.
“PSALM seeks this Commission to
grant the PA to enable PSALM to immediately recover SCC and accumulate
sufficient funds to service loan obligations that were incurred for the
eligible IPP contracts. Early SCC recovery will, likewise, translate to
substantial savings on borrowing costs, as PSALM need not resort to refinancing
to service the eligible IPP obligations and maturing debts,” it added.
PSALM, the state agency tasked to
privatize NPC’s power assets to help generate funds to pay off NPC’s debts, is
authorized to impose UC from all end users to compensate for any remaining
deficit.
It is also mandated by law to
calculate the amount of the stranded debts and stranded contract costs of NPC,
which shall be the basis for the ERC in determining the universal charge.
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